Sector Snap: Solar companies
Analyst upgrades some solar-related cos.; says near-term growth outweighs long-term risks
NEW YORK (AP) -- Solar shares rose Thursday as Goldman Sachs upgraded a number of companies and raised its price targets, saying near-term growth and better earnings outweigh long-term risks.
Analyst Brian Lee believes the sector is minimizing its risk by shifting efforts away from Europe and more toward North America and emerging markets like Japan, India, South America and the Middle East. Earnings for solar-related companies now seem to be stabilizing, he added.
A worldwide glut of solar panels sent panel prices plummeting in recent years and eviscerated the profits of solar panel makers around the world. The glut was caused by an increase in manufacturing capacity at a time when renewable energy subsidies had begun to shrink, especially in Europe, the world's biggest solar market.
Lee raised First Solar Inc. to "Buy" from "Neutral" and increased its price target to $64 from $43. The analyst believes the company is showing the first real signs of stabilization in its growth and earnings forecasts, with contracted project backlog of more than 1 gigawatts.
Shares of First Solar rose $3.61, or 7 percent, to $55.37 in midday trading. Over the past year, the stock has traded between $11.43 and $59.
Lee boosted SunPower Corp. to "Neutral" from "Sell" and lifted the company's price target to $18 from $13. The analyst said while he's been concerned about higher-than-average exposure to Europe and its concentrated project portfolio, the company has made significant progress in shifting its revenue and earnings toward higher-margin downstream businesses.
SunPower's stock gained 54 cents, or 2.8 percent, to $20.18. The shares have traded in a 52-week range of $3.71 to $23.76.
The analyst added MEMC Electronic Materials Inc., a maker of products for the semiconductor and solar industries, to his CL-Buy list and raised its price target to $10 from $8. Lee said MEMC could be the benefactor of a possible cyclical recovery in semiconductor unit volumes during the second half of the year. The company's increasingly shareholder-friendly board is also viewed positively, with Lee saying that they now seem more focused on providing better value to stockholders.
Shares of MEMC, based in St. Peters, Mo., added 43 cents, or 5.6 percent, to $8.05. The stock touched $8.30 earlier in the session, the highest point in more than a year.
